Jan-Stone Limited is looking into the following two (2) investment projects:

Project A B
Cost of Investment $450,000 $560,000
Estimated net cash flows
Year $ $
1 180,000 220,000
2 160,000 200,000
3 130,000 170,000
4 110,000 150,000
5 90,000 120,000
6 60,000 80,000
730,000 940,000

The company’s required rate of return for both projects is 15%.

a. Calculate the net present value (NPV) for both projects.

b. Evaluate and advise the management which one of the projects to opt for, if any.

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